Are you looking to start a broker-dealer or buy a broker-dealer? If so, we can assist you in weighing the two options.  Securities Compliance Management, Inc., also doing business as MasterCompliance, is a full-service compliance consulting firm.  We have assisted many clients in starting and buying a broker-dealer.  There are many factors that you should consider before deciding which option is the best for you.   Buy a Broker-Dealer

Do you know the difference between a limited broker-dealer (limited BD) and a full-service broker-dealer (full-service BD)? A limited BD is a firm that has a limited product line. For example, a firm that only does private placements and mergers & acquisitions.  A full-service broker-dealer is a firm that has a comprehensive product line.  A full-service BD may assist clients in buying stocks, bonds, option, mutual fund, and exchange-traded funds (ETFs). If you’re considering buying a firm, a limited BD and a full-service BD both have their advantages.

A limited BD is usually easier to find on the market than a full-service BD.  Therefore, the costs involved in assisting a client in finding a limited BD is usually less.  Additionally, there is typically a lower risk involved in purchasing a limited BD versus a full-service BD.  This is due to the fact that a limited BD will usually have less historical activity than a full-service BD.  Generally, the purchaser of a full-service BD will have a higher risk of successor liability due to its more active transaction history.

In our experience, the purchase price to buy a limited BD begins around $50,000.  Typically, a full-service BD is more costly and the purchase price will begin around $100,000.  However, one advantage of a full-service BD is that the product lines may be a closer match to the product lines that you need.  A limited BD only has a few product lines and you may need to submit a Continuing Membership Application (CMA) to expand the business lines.

Start a Broker-Dealer

Compared to buying a broker-dealer, starting a broker-dealer is usually faster as it eliminates the time it takes to locate a firm that fits the client’s needs and the time it will take to conduct timely due diligence on the prospect.  It also allows you to avoid any successor liability.  Additionally, you will not have to pay a premium to become an owner.  From the beginning of the process, you can request the business lines that you need and avoid filing a CMA.

If you are interested in buying a broker-dealer or starting a broker-dealer, please contact us at 404-841-1010.